Appian Corporation (NASDAQ:APPN) Q3 2023 Earnings Call Transcript

I believe what we’ve got is powerful. And the pipeline reflects that the customers may believe it too. I’m excited about where that’ll take us next year. And I want to add that there is no reason why case management needs to remain a public sector offering. Appian is, as you know, located near to the federal government, I am from my office at this very moment looking at the beltway, the beltway that goes around Washington D.C. We start some patterns and offerings in the government just because it’s here. And so, we may find that this solution has its greatest impact eventually outside of the public sector. That’s — I just want to clarify that it is not suitable only for that industry.

Kevin Kumar: And then, maybe one on kind of the net new business in the quarter in terms of the mix of new customers versus expansion. How does that compare to prior quarters? I saw the uptick in net expansion rate this quarter kind of within your historical range, but curious if you’d call out any specific drivers of strength there. Thank you.

Matt Calkins: Yes. You’re right, 117% to 115%, I don’t think it’s important. As for the mix this quarter, yes, it was a little bit more for the existing customers, I would say. And you could see that not only in the 117% NRR, but also in the stat that has us passing $100 million per year customers, in both cases. That’s where the energy was this quarter.

Operator: Our next question comes from the line of Derek Wood of TD Cowen.

Andrew Sherman: It’s Andrew on for Derek. Matt, speaking of that 1 million customer cohort chart, it looked like a solid uptick there. What exactly is driving the upsell strength there? What are the new products they’re buying to get them up to that level?

Matt Calkins: Yes. Well, I think happy customers are driving it. I think we’re just creating value is a very fundamental answer. But I think that’s really what comes down to it. There’s been no shock to the equilibrium. We just have happy customers and they buy more. I think that we are going to focus more on this next year, because we believe we can go deeper with the customers that we’ve got. I mentioned sales plays, right, in my talk. Part of that is uplifts and expansion. I believe we can do more in these customers. But that doesn’t mean that we’ll neglect the customers we don’t have. We’re going after those two.

Andrew Sherman: And then, Matt, I’m not sure I heard as much about partners in the prepared as they usually do. How would you characterize partner performance in the quarter and kind of on the new program you talked about earlier this year, the incentives there, any early impact to talk about on the partner side that’s helping you?

Matt Calkins: Yes. It’s funny that I didn’t mention them because, of course, this is a major time for us with regards to partners. I guess, I probably left it out because we have yet to reach conclusions with the new efforts, but we’re making them. Our key theme here is focus and intensive advocacy in both directions. That’s what we want to give, that’s what we want to get. And so, we’re shaping new closer relationships with our partners at this moment to achieve that.

Operator: Our next question comes from the line of Joe Meares of Truist Securities.

Joe Meares: Just regarding OpEx, it seems like each quarter for the last couple of quarters, you’ve been driving about a $5 million upside to the guidance. Is that the cadence that we should expect going through the end of this year into next year in terms of just how you guys can drive profitability, or are there any plans in place around cost savings that could make that increase a little more exponentially? And I have a follow-up.